The UK government announced today its intention to offer billions in seed money to kick-start satellite based driving taxes at the local level. In speech to parliament, Transport Secretary Alistair Darling said that the Transport Innovation Fund would initially provide up to £18 million (US $31 million) in funding for local tax systems that would, for example, use GPS satellite tracking to charge motorists for every mile they drive. That amount would quickly grow to £200 million (US $351 million) annually and by 2014, the fund would reach £2.5 billion (US $4.4 billion). The money would also be available to make "better use of buses, tram or light rail schemes" as long as such plans fit with national road pricing priorities.

Critics charged the government has already declared road pricing to be the answer to congestion without considering any alternatives.

"Yet again the Government has a one track mind on transport," said Association of British Drivers spokesman Mark McArthur-Christie. "This is like having a toolbox with just a hammer in it -- every problem looks like a nail. We need a full transport toolbox, where individuals can decide the best form of transport for their journey -- be that bus, cycle, car, motorbike or train."

Darling introduced his road tax proposal last month suggesting it should include "congestion pricing." He called for pilot programs to become operational within two years.

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Statement To Parliament by the Secretary Of State For Transport, 5 July 2005

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With permission Mr Speaker I would like to make a statement on the Transport Innovation Fund, as well as setting out how we are taking forward the development of a national road pricing scheme.

We said in our manifesto that we would examine the potential of moving away from the current system of motoring taxation towards a national system of road pricing - which along with a range of other measures would tackle congestion in the long term.

Congestion on the roads is a complex problem which will need a range of measures if we are to tackle it successfully, including investment in public transport, as well as measures to get more out of the network, through better traffic management and car pool lanes for example.

And because of our strong economy, demography and the fact that we live on a crowded island, we need to plan ahead now for the pressures we will face in the next 20 to 30 years.

Mr Speaker - road pricing is about making journey times by car more reliable for motorists by getting more out of the road network.

Today I want to set out what the Government is proposing to develop the concept of road pricing further, the role of the Transport Innovation Fund, as well as setting out further work that needs to be done.

And my Department is also publishing its two new congestion targets today which focus on improving reliability of journey times on the strategic network and movement of people on urban roads.

Mr Speaker, the Government set out its intention to establish the Transport Innovation Fund in the White Paper "The Future of Transport", which we published last July.

We pointed out then that without radical measures, including more effective demand management, road congestion would get worse.

That is why we need to look at whether road pricing would allow us to get more out of the network, especially at peak times.

If we are to implement a national road pricing scheme, we would not do it all in one go. It wouldn't be possible.

A road pricing feasibility study, which was published in parallel with the White Paper, last year, recommended that it would be far better that local or regional schemes should be piloted to test approaches as road pricing is further developed.

The Transport Innovation Fund is part of that. The Fund is central to the approach I set out in the White Paper. It offers substantial, long term investment. It will support smarter and better management of the capacity we have. And it will ensure that we can plan ahead, preparing for the long term challenges we face.

The Transport Innovation Fund will be used to support the delivery of infrastructure schemes which will promote our national productivity. Transport, well planned and sensitive to our environmental and social objectives, is fundamental to our sustained prosperity, through road improvement, as well as rail, and light rail schemes for example.

The Fund will also be used to support local plans which will help tackle congestion. We are looking for proposals which combine some form of demand management such as road pricing, with better public transport. These pilot schemes will contribute to our work on national road pricing.

Today I am publishing further information on how we expect to deploy the Transport Innovation Fund, which comes on stream from 2008 - 09, and is set to increase over time reaching some £2.5bn by 2014/15.

We are also today asking local authorities to bid for development funding, which will be made available over the next three years, to support planning for local demand management schemes where pricing is a major element. We have set aside £18m between 2005/6 and 2007/8 to support preliminary scheme development by local transport authorities.

These schemes could ultimately be funded from the Transport Innovation Fund. Within the Fund, therefore, we are prepared to ensure that up to £200m a year is ultimately available to support such local pilots. If more good schemes emerge, then more can be made available.

The guidelines for bidding for this "pump priming" development work are today being placed in the Library, published on the Department for Transport Website and being sent to all local highway authorities in England.

If a local authority or a group of local authorities in Scotland or Wales wish to introduce a road pricing pilot project, they could do so in conjunction with the Scottish Executive or the Welsh Assembly Government. The department will be happy to work with the devolved administrations on such schemes, given their national implications.

Mr Speaker ahead of any future national scheme parts of the country already experiencing congestion may wish to develop road pricing schemes to improve travel within their areas.

If road pricing is to be developed we need to develop a pilot scheme covering one or more local authority areas, or for example a PTE where congestion is already a problem and where we know that the local authorities want to do something about it.

We want to work with local authorities to develop and implement a pilot scheme for road pricing. No decisions have been taken on where such a pilot might take place. We hope to identify partner authorities willing to work up pilot proposals within the next year. And for them to start work on the ground with support from the Transport Innovation Fund when it comes on stream.

Mr Speaker, alongside the money we are making available through the Transport Innovation Fund, we are currently taking forward a programme of work which would enable us to take decisions on road pricing in the future, covering three key areas.

The first is about the shape of a national road pricing scheme. There are different forms national road pricing could take and we are looking at the options, and the scale of benefits they would bring.

We are also looking at how best to address environmental issues, in particular the problem of vehicle emissions and climate change. We clearly need to encourage the development and use of cleaner vehicles.

However, we also need to avoid designing a scheme that is too complex or costly to run.

The second element of work is about technological capability.

We need technology and systems that can be provided at an affordable price and to a satisfactory level of reliability. We need to engage with the industry to discuss the technologies which exist today and how they might be developed for the future.

Much of the technology already in use for commercial purposes might be suitable, and might come with the benefit of working in practice.

For instance, one UK insurance company is currently piloting a new system of "pay as you drive" insurance, which uses a satellite box fitted in the car to calculate the cost of the insurance premium on a monthly basis, and sent to car users as an itemised bill which looks almost exactly like a mobile phone bill.

Many cars are already fitted with technology which combines satellite positioning with mobile communications, in order to provide facilities such as information on road conditions. And in 10 to 15 years this will be commonplace.

But we need to establish what the technological options there are for putting together distance, place and time of travel.

We are looking at what is working now, and how we could approach pricing in a way that allowed the scope to benefit from future technological development.

Mr Speaker, whilst cross party support to examine the benefits that road pricing might bring is important, the lesson of recent times is that we need a consensus not just among politicians, but also amongst the public.

And we are considering how to provide the safeguards that would need to be built into the system, for example, to respect individuals' privacy and to ensure the right price is put on the right journey in a way that the motorist can see and understand.

Mr Speaker a great deal of work has already been done on some of these issues in the development of the Lorry Road User Charging scheme. This has confirmed that a distance based charge has the potential to be a workable and practical way forward.

But our thinking on national road pricing has developed further. We are now taking forward work on a national system of road pricing, so it is right for us to take forward the plans for distance based lorry charging as part of the wider work on national road pricing - to work for a single comprehensive, cost-effective system.

So although the current procurement for lorry road user charging will not continue, we will continue to work with industry and ensure that we carry the full experience gained from the project into the wider work to develop a national road pricing system for cars and lorries.

And we will continue to work with the haulage industry to ensure that its needs are represented as we develop a national road pricing system.